What tips would you give to businesses to avoid potential OFAC violations?
OFAC Attorney: One common practice of companies is to develop a sanctions compliance program. It is an instruction manual for the company, its officers, and its employees to help avoid sanctions violations and to educate their employees on what sanctions are, as well as what they need to look out for. There is no one-size-fits-all compliance program. The size of a company, how sophisticated the company is, and the nature of the company’s transactions are all factors that need to be considered before adopting a compliance program. Only after a thorough review of the company’s situation is performed can a custom sanctions program be developed.
Another good reason to have a sanctions compliance program is that OFAC commonly considers the existence of a robust and practiced compliance program as a mitigating factor. So in the event a sanctions violation occurs, the company may benefit from a more lenient enforcement response from OFAC. You can read more about OFAC Sanctions compliance in this U.S. Department of the Treasury pdf report.
Do online businesses need to worry about OFAC?
OFAC Attorney: They do because the sanctions are broad and they tend to prohibit the exportation of goods, technology, and services. There are a lot of services that can now be transmitted via the internet. If an online business is selling goods to sanctioned parties or countries, that could be a violation. For example, an online money-transfer company could be liable for sanctions violations if they let Iranian nationals use their service because they are exporting a financial service to Iranians.
What are general licenses?
OFAC Attorney: A general license is an authorization contained within the regulations themselves. People do not have to apply for anything to utilize a general license. It is up to the person or company that wants to utilize that authorization to make sure they meet all of the requirements, limitations, and restrictions of that authorization.
An example of this is in the Iran sanctions with respect to inheritances. If a U.S. citizen living in the United States has a family member in Iran who passes away and leaves them property, they are allowed to sell the property and move that money from Iran to the United States by going through the proper channels. All of this can be performed without applying for a specific license.
Without this general license, the inheritance-related transaction would be prohibited. Having an attorney evaluate your transaction for compliance with a general license is one way to protect yourself from inadvertently violating the law. You can see a copy of a general license issued by the Treasury Department here.
What are specific licenses?
OFAC Attorney: A specific license is an authorization that someone specifically seeks out because there is no other way to undertake the activity without violating the law. This is primarily done by filing a license application with OFAC. They are asking permission from OFAC to do something that is prohibited.
It is important to use an attorney that knows the sanctions regulations in such circumstances because applicants may inadvertently reveal to OFAC a situation that evidences a prior violation. This happens more often than you would expect.
It is important to consult with an attorney who can craft a license that specifically states what someone is seeking to do but doesn’t open them up to further liability. It is also important to have an attorney that is knowledgeable about the policies behind the sanctions. There are a lot of actions that are consistent with U.S. foreign policy but that are otherwise prohibited by the sanctions. If someone has an attorney who stays up-to-date on sanctions developments, they can make policy arguments in their specific license application for why the authorization should be granted.
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